AutoNation results surge on rising sales, tech use

July 20, 2012|By Doreen Hemlock, Staff writer

AutoNation, the country's largest retailer of cars and trucks, Thursday reported its third straight quarter of record results, leveraging its size and technology to achieve better than expected profits from rising auto sales.

The Fort Lauderdale-based company said profits from continuing operations hit $79 million for the period, up 8 percent from a year ago. That works out to 64 cents a share, far exceeding the 59 cents a share that analysts forecast.

Revenues for the quarter rose to $3.9 billion, up 17 percent from a year ago. The company gained in every major segment of its business: new cars, used cars, parts and service, plus financing.

Retail sales of new cars rose 29 percent for the quarter. That's better than 17 percent gains for the nation as a whole, according to estimates from researcher CNW.

AutoNation said its new vehicle sales jumped 28 percent in Florida for the quarter, compared with its 39 percent growth in California and 27 percent surge in Texas.

Chief Executive Mike Jackson predicted strong results ahead too, as the country remains on track to sell between 14 million and 14.5 million new cars and trucks this year, up from nearly 13 million last year.

U.S. customers are lured by the need to replace vehicles that now average about 11 years old, and they're finding low interest rates and new fuel-efficient models attractive, Jackson said. It helps too that shortages of Japanese cars after last year's tsunami and earthquake have ended, boosting supplies.

AutoNation has been managing expenses carefully, hiring only about 2 percent more staff in the quarter to reach 20,200 employees nationwide. Many employees work on commission and are seeing their incomes spike with sales growth, Chief Operating Officer Mike Maroone said in an interview Thursday.

The company also is focusing on technology in operations, including a push to sell more cars online. While nine of 10 customers use the Internet for research, few now buy autos fully online. AutoNation is developing a "digital storefront" to encourage more sales through the Internet, said Maroone.

AutoNation's earnings per share also received a boost from stock repurchases. During the quarter, the company bought back 3.7 million shares for $126.2 million. It now has board approval to buy back another $368 million.

Considered a bellwether for the auto industry, AutoNation operates 260 new vehicle franchises offering 32 brands in 15 states. The company said it has posted 10 straight quarters of revenue and profit growth, as the industry recovers from the depths of the U.S. recession.

The price of AutoNation shares fell by $1.67 to close at $40.78 Thursday on the New York Stock Exchange. Shares have been trading between $30.46 and $42.84 over the past year.